Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the number of EU member states that are currently enabling reduced VAT treatment of the installation of energy saving materials.

At Spring Statement 2022, the Chancellor announced that the VAT relief for the installation of energy saving materials (ESMs) in residential accommodation would be expanded in Great Britain from 1 April 2022. The changes have removed complex eligibility conditions, reinstated wind and water turbines as qualifying materials, and reduced the rate of VAT to zero per cent for the next 5 years.

EU rules restrict the VAT reliefs which can be introduced in EU Member States. As such, no Member State can currently apply a new VAT zero rate or reduced rate to the installation of ESMs which is equivalent to that being introduced in Great Britain.

Under the EU VAT Rates Proposal officially adopted at ECOFIN on Tuesday 5 April 2022, and due to be introduced across the EU from 1 January 2025, the list of items on which Member States can apply reduced rates and zero rates will be expanded. However, this expanded list only covers the supply and installation of solar panels and does not include other key items in the UK’s ESM measure, such as insulation or wind and water turbines.